Effective Growth Strategies for Managed Service Providers

The managed service provider (MSP) market continues to thrive with 81% of MSPs reporting stable or increased revenues, according to Datto's “Global State of the MSP” report. It’s clear that the demand for managed services is stronger than ever. As small and mid-sized businesses (SMBs) increasingly outsource IT and security functions, Managed Service Providers (MSPs) have a unique opportunity to expand their offerings and grow sustainably if they employ the right strategies.

In this article, we’ll explore the most effective growth strategies for MSPs, covering everything from building a scalable service delivery model to capitalizing on Office 365 margins, choosing the right vendor, and optimizing cybersecurity offerings.

Strategies to Ensure MSP Growth

For MSPs, strategic growth is not just about acquiring new clients; it’s about delivering value, creating operational efficiency, and building long-term, high-margin relationships. Three key strategies stand out:

Stay Ahead of Technology Trends

Growth-focused MSPs must anticipate market demands. This means staying informed about emerging trends like managed backup and storage, regulations around data protection, and the growing threat landscape.

• Managed Storage and Backup: As ransomware attacks rise, businesses are looking for proactive disaster recovery solutions. MSPs that offer secure backup and archiving services can differentiate themselves.
• Compliance-Driven Services: With regulations like GDPR and HIPAA, clients are seeking solutions that make compliance easier. Offering compliance-ready tools (like email archiving with GDPR support) opens new revenue streams.
• Security-as-a-Service: Organizations face complex cybersecurity threats. MSPs delivering SOC-as-a-Service, DNS filtering, and endpoint protection can meet these demands profitably.

Collaborative Client Relationships

Growth is accelerated when MSPs act as partners, not just vendors. Building close, consultative relationships enhances trust and fosters opportunities for upselling. As internal IT teams shrink or refocus, MSPs are stepping in to fill skills gaps, especially in cybersecurity.

Set Growth Goals and Track Profitability

Smart MSPs define growth not just in terms of revenue, but also in terms of profitability and efficiency. This includes evaluating clients annually to ensure contracts are viable and identifying high-maintenance, low-profit customers. Creating a balanced, diversified client portfolio across industries and company sizes minimizes risk in downturns.

Choosing an MSP-First Vendor

Selecting the right vendor is one of the most impactful decisions an MSP can make. A vendor aligned with MSP-specific needs ensures smoother onboarding, faster deployment, and greater profitability. Here’s what to look for:

• MSP-Centric Design: The solution should be tailored for recurring revenue models and include tools that reduce operational overhead.
• White Labeling: Brandable solutions help MSPs maintain visibility and build client trust.
• Trial-Friendly & Low-Touch: Solutions should enable short sales cycles and require minimal IT input for deployment.
• Vendor Support & Integration: Look for vendors who provide training, one-on-one support, and seamless integration into your API stack.
• Proven MSP Track Record: Vendors like TitanHQ, with a history of working with thousands of MSPs, bring insight and reliability to the partnership.

Making Margin with Security Solutions

Security has emerged as a top growth area for MSPs, but not all solutions are created equal. Profitability depends on selecting tools that align with the MSP business model and address real-world problems.

Design a Marketable Security Stack

A profitable MSP stack includes:

• Email Security: Solutions like PhishTitan and SpamTitan block phishing, spam, and malware. Advanced features like encryption and data loss prevention (DLP) offer upsell opportunities.
• DNS Filtering: Products like WebTitan stop threats before they reach the network, crucial for defense-in-depth strategies.
• Email Archiving: With ArcTitan, MSPs can offer clients legal and compliance-ready email storage solutions.
• Security Awareness Training: Platforms like TitanHQ SAT & Phishing simulations help reduce human error and complete the security suite.

Importantly, the security stack must be cloud-based, easy to manage, and highly automated to reduce technician workload and support overhead, keeping margins high.

MSPs Boost Margins on Office 365 Business

Office 365 adoption is widespread, particularly among small to medium-sized businesses (SMBs). However, margins on 365 licenses alone are razor thin. To turn Office 365 from a break-even offer into a profit driver, MSPs must bundle complementary security solutions.

Security is the Margin Engine

Microsoft offers basic security, but it often falls short of SMB needs. Smart MSPs are bundling advanced email security, DNS filtering, and compliance tools to fill these gaps.

In March 2025 TitanHQ in conjunction with Osterman Research conducted original research involving over 200 IT professionals; all respondents were using M365 as their primary cloud email platform.

The breakshow by plan is:

• Microsoft 365 (E3) 29%
• Microsoft 365 (E5) 58.70%
• Microsoft 365 (a plan other than E3 or E5) 12.30%

One in five organizations lost money through a business email compromise attack over the previous 12 months. Half of organizations experienced between 2 and 4 types of incidents.

For a closer look download full report here.

Get 10 pages of original research filled with exclusive insights, charts, and data on the current state of email security. This focused report uncovers how M365 users are tackling emerging threats featuring findings you won’t see anywhere else.

The real profit lies in delivering:

• Defense-in-Depth: Layering TitanHQ solutions with O365 boosts margins significantly.
• Value-Added Services: Including backup, archiving, migration, and training further enhance customer value.
• Customer Education: Many SMBs don’t understand the risks of inadequate security. MSPs that educate their clients position themselves as trusted advisors and increase sales.

With 73% of MSPs citing security as their fastest-growing service, the path forward is clear: Office 365 becomes profitable when wrapped in a complete, margin-rich security suite.

Combat Margin Killers

Low margins are the biggest threat to MSP sustainability. Here are the five common profit margin killers and how to avoid them:

1. Lowballing: Don’t undersell yourself. Offer top-tier solutions with demonstrable ROI.
2. Lack of Upselling Strategy: Build a security stack that evolves with client needs.
3. Time-Consuming Tools: Choose solutions designed for MSP delivery, mple, scalable, and cloud-managed.
4. Contract Creep: Define SLAs clearly. Enforce boundaries for support and charge for extras.
5. Poor Marketing: Educate prospects through SEO-optimized content, email newsletters, and webinars. Partner with vendors that support your marketing efforts.

Building a Future-Ready MSP

The MSP sector has not just survived the post-pandemic era, it has thrived. Yet success in today’s market means more than offering IT services. It requires building margin-rich security stacks, forging strong client relationships, choosing MSP-first vendors, and optimizing operations through unified platforms.

Strategic MSPs must think beyond ticket resolution. They must anticipate trends, educate their clients, prove value, and continuously refine their offerings. The reward? Stronger client retention, increased revenue, and a sustainable growth trajectory in a highly competitive field.

The future belongs to MSPs that adapt quickly, think strategically, and execute efficiently. By applying the growth strategies outlined above, your MSP can not only stay competitive but lead the market and build a profitable, long-term business.

Become a MSP partner and get started today.